Cannon Trust 1 exam with correct answers

Cannon Trust 1 exam with correct |\ |\ |\ |\ |\ |\




answers


Which of the following transfers are includable in the gross estate
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


of the donor if made within 3 years of death?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\




A. Gift of $8,000 cash value life insurance policy to son.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\




B. Gift of $9,800 cash to daughter.
|\ |\ |\ |\ |\ |\




C. Gift of $10,000 cash to friend.
|\ |\ |\ |\ |\ |\




D. Gift of $5,000 stock in a closely held company to parent. -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


CORRECT ANSWERS ✔✔Gift of $8,000 cash value life insurance
|\ |\ |\ |\ |\ |\ |\ |\ |\


policy to son. |\ |\




A simple trust earned $27,000 in dividends. It paid $4,000 in
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


trustee fees, one-half from income and one-half from principal.
|\ |\ |\ |\ |\ |\ |\ |\ |\


Trust accounting income is which of the following?
|\ |\ |\ |\ |\ |\ |\




$0
$23.000
$25.000
$27,000 - CORRECT ANSWERS ✔✔$25,000 |\ |\ |\ |\




If the Trust Document is silent with respect to a certain cash
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


transaction, the Trust Administrator should first look to which of
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


the following for guidance?
|\ |\ |\




A. Court of Jurisdiction
|\ |\ |\




B Principal and Income Law of the State
|\ |\ |\ |\ |\ |\ |\

,C. Grantor|\




D. OCC - CORRECT ANSWERS ✔✔Principal and Income Law of the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


State
|\




When determining a long-term sustainable rate of return for a
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


unitrust payout, which of the following best represents the range
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


of high confidence payout percentages?
|\ |\ |\ |\




A. 1-2%
|\




B. 2-3%
|\




C. 3-5% |\




D 120% of the federal midterm rate - CORRECT ANSWERS ✔✔3-
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


5%


Which of the following is an example of tangible personal
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


property?
A. Gold bar
|\ |\




B. Common stock certificate
|\ |\ |\




C. Patent |\




D. Vacant land - CORRECT ANSWERS ✔✔Gold Bar
|\ |\ |\ |\ |\ |\ |\




Which of the following is an example of tangible personal
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


property?
A. Family residence
|\ |\




B. IBM stock
|\ |\




C. Jewelry|\




D. Rental house - CORRECT ANSWERS ✔✔Jewelry
|\ |\ |\ |\ |\ |\

,A to B for life, then to C. Following this transfer, which of the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


following is true? |\ |\




A. A has a fee simple interest.
|\ |\ |\ |\ |\ |\




B. B has a reversionary interest.
|\ |\ |\ |\ |\




C. C has a remainder interest.
|\ |\ |\ |\ |\




D. C has a life estate. - CORRECT ANSWERS ✔✔C has a
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


remainder interest |\




Under joint tenants with rights of survivorship, when one tenant
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


dies which of the following best describes the result?
|\ |\ |\ |\ |\ |\ |\ |\




A. Her share passes through her will to her heirs.
|\ |\ |\ |\ |\ |\ |\ |\ |\




B. Her share passes by law to her heirs, not through her will.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\




C. Her share passes to the surviving joint tenant regardless of
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


what her will says. |\ |\ |\




D. The asset must be sold and the estate gets 1/2 of the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


proceeds. - CORRECT ANSWERS ✔✔Her share passes to the
|\ |\ |\ |\ |\ |\ |\ |\ |\


surviving joint rebrand regardless of what her will says
|\ |\ |\ |\ |\ |\ |\ |\




A decedent owns $400,000 in his own name, a $200,000 home in
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


joint tenancy with his
|\ |\ |\ |\




spouse and a $100,000 life insurance policy with the children as
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


beneficiaries. Which |\




of the following is the amount passing through probate?
|\ |\ |\ |\ |\ |\ |\ |\




A. 0 |\




B. $400,000.
|\




C. $500.000.
|\

, D. $700,000. - CORRECT ANSWERS ✔✔$400,000
|\ |\ |\ |\ |\




In cutting down a tree, which of the following occurs?
|\ |\ |\ |\ |\ |\ |\ |\ |\




A. Real property is converted to personal property
|\ |\ |\ |\ |\ |\ |\




B. Personal property is converted to real property.
|\ |\ |\ |\ |\ |\ |\




C. Real property is converted to a fixture.
|\ |\ |\ |\ |\ |\ |\




D. There is no conversion, the tree remains real property. -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


CORRECT ANSWERS ✔✔Real property is converted to personal
|\ |\ |\ |\ |\ |\ |\ |\


property


Which of the following transfers are includable in the gross estate
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


of the donor if made within 3 years of death?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\




A. Gift of $8,000 cash value life insurance policy to son.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\




B. Gift of $9,800 cash to daughter.
|\ |\ |\ |\ |\ |\




C. Gift of $10,000 cash to friend.
|\ |\ |\ |\ |\ |\




D. Gift of $5,000 stock in a closely held company to parent. -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


CORRECT ANSWERS ✔✔Gift of $8,000 cash value life insurance
|\ |\ |\ |\ |\ |\ |\ |\ |\


policy to son |\ |\




Which of the following can be deducted either on the decedent's
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


final 1040 income tax return or on the Form 706 Estate Tax
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


return?
A. Funeral expenses
|\ |\ |\




B. Medical expenses relating to the decedent's last.
|\ |\ |\ |\ |\ |\ |\




C. Court costs in probating the estate.
|\ |\ |\ |\ |\ |\




D. Executor's administration expenses. - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\


✔✔Medical expenses relating to the decedents last illness|\ |\ |\ |\ |\ |\ |\